Tuesday, October 25, 2016
Navigant reported revenue and EPS beats over the street's estimates.
Key highlights include:
Revenue before reimbursements increased 13%, with 10% organic growth y/y
Net income was $17.2M, compared to $14.2M y/y (21% increase)
Majority of the revenue increase stemmed from the Healthcare and Financial Services Advisory segments. Financial services advisory experienced a 49.3% organic increase in segment revenue y/y, and the health care segment posted 23.8% increase in revenue y/y, which is a combination of acquisition and organic growth. Company operating margin increased to 35.4% which is a 170 bps increase from last year.
Cash flow was again positive, and free cash flow was $25.5M for the quarter. Bank debt decreased by $28M sequentially..
As a result of the positive results, NCI also increased guidance to the higher end of their previously recorded guidance.
As a result of the earnings release, the market responded very favorably with an 12% increase in share price at the time of writing this report. At this time, the positive is above price target and I recommend that we sell the position to secure upside.
Tuesday, June 14, 2016
The University at Albany School of Business Investment Group purchased 205 shares of Nautilus Inc. (NLS) stock on Friday, May 6th at a price of $17.04. Following a strong post market earnings call on Monday, May 9th the group purchased an additional 100 shares at $20.13 and 75 more at $20.16. Nautilus performed well in May, moving up 13.4% in the month. The combination of strong price performance, strong earnings, and favorable guidance caused the stock to surge. The company’s future is still bright with recent acquisitions of Octane Fitness which compliments Nautilus’ already strong brand offering. Currently the stock is priced at $19.14 (down 4.40% on 6/14 with no public explanation) with a price target of $22.59. Our investment thesis is still intact and the stock should bounce back in the near future.
Cerner May Monthly Report
During the month of April we purchased 60 shares of Cerner (representing a half position) at $56.60. Cerner opened the month on May 2nd at $56.96. Cerner closed on May 31st at a price of $55.61. This represents a 2.37% loss over the course of the month as well as a -1.75% loss since purchased at 56.60.
On Friday May 19th, we completed a full position in Cerner by purchasing 60 additional shares at $54.40. This represents a 2.03% gain, nearly offsetting our loss from the other half position.
With a price target of $72.17, $29.77 upside remains. The main reason Cerner’s did not gain upside during the month of May was because its first quarter financial results did not exceed expectations. Cerner’s clinical information and services struggled to meet revenue expectations. In the quarter one earnings call, management lowered guidance for their clinical information and services resulting in their expectations being set very low. This leaves plenty of room for organic growth to materialize as well as prevent another miss on expectations. Earnings have a huge influence on the price of a companies stock and can be a catalyst for momentum. I believe Cerner will exceed their outlook with expectations being set low. This will result in Cerner’s stock price appreciating at a constant rate over the next quarter.
Wednesday, June 1, 2016
Today, June 1st, before the markets opened, Micheal Kors Holdings Limited released their Q4 2016 earnings at $0.98 a share, topping analyst projections by $.02. The Revenue rose to $1.2 billion, compared to $1.08 billion year-over-year. KORS also beat revenue estimates that projected that the company would earn $1.15 billion. Retail net sales increased by 22% this past quarter, partly due to new store openings. KORS has also Michael Kors LTD., gaining the exclusive license of Chinese products, as well as other Asian jurisdictions for $500 million in cash. The company has also come out and issued a weak guidance for the current quarter (Q1 2017), projecting below analyst estimates for EPS and Revenue. KORS projects an EPS of $0.70-$0.74 with revenue between $940-$950 million range as analysts project an EPS of $0.94 and a revenue of $1.03 billion. The reason for this weak guidance spans from an expected increase in expenses on global investments as well as new stores, infrastructure and distribution and a few other variables. They have also announced a new $1 billion share buyback program to replace the previous buyback program from 2014. In light of the earnings report, KORS stock saw a 10% increase pre-market and is currently up around 7.5%.
Tuesday, May 10, 2016
On May 5, Activision Blizzard reported Q1 2016 GAAP Earnings per share of $0.45 and Revenue of $1.46 billion. They reported non-GAAP EPS of $0.23 and Revenue of $812.1 million, exceeding analyst’s expectations of $0.12 and $812.12 million, respectively. The company reported strong Monthly average users (MAUs), totaling 544 million. Total MAUs can be broken down as follows: Activision- 55 million, up 10% from last year, Blizzard- 26 million, up 23%, and King- 463 million, up 3% from the previous quarter. Activision also continues to have four of the top 10 games on next-gen consoles, and King had three of the top 15 grossing titles in U.S. mobile app stores for the ninth consecutive quarter. Activision Blizzard didn’t have any major new releases during the first quarter, but did issue a second expansion pack for its highly popular “Call of Duty: Black Ops III”. ATVI shares were up 4.1% at $36.35 in after-hours trading, up from its closing price of $34.85. The stock ended the week strong, closing the post earnings trading session at $37.45.
Post market close on April 26th, AT&T reported first quarter adjusted earnings per share of $0.72. This represents a year over year increase of 10.8%, and exceeded analyst estimates of $0.69. They reported Revenue of $40.54 billion, up 24% year over year- largely attributed to the acquisition of DIRECTV in July of 2015. They continue to show margin growth, reporting an operating margin of 17.6%, up from 17.1%, with margin expansion in every domestic business segment. Operating cash flows were up more than $1 billion from Q1 2015, reporting free cash flow of $3.2 billion, representing a year over year increase of 17%. They reported operating expenses of $33.4 billion, up from $27 billion in the same quarter last year. Operating income was reported at $7.1 billion, up 28% from Q1 2015. Despite an otherwise successful quarter, the wireless business lost 363,000 mainstream phone connections, exceeding the 200,000 mainstream phone loss that had been expected. They also lost 54,000 video subscribers, even with gains at DIRECTV. The stock opened the following day slightly lower at $37.95, but hit an intra-day high at $38.89, and then ended the day at $38.73.
Monday, May 9, 2016
April Monthly Report & Current Outlook
I reiterate a BUY rating a Cerner.
Cerner released Quarter 1 earnings results on May 5th, 2016. Cerner opened on the market at $53.25 on May 6th, 2016. They missed their revenue guidance due to the fact that their hardware sales didn’t materialize as expected. Cerner decreased their guidance for revenue next quarter by 25 million to ensure that they will not miss earnings. Management has expressed difficulty in the ability to predict hardware sales so that is why they wanted to go with a conservative outlook. Cerner has strong revenue visibility as 79% of backlog is going to be realized. Since this signifies the majority of Cerner’s business, it provides a lot of room for revenue deriving from technology resale to beat expectation by.
On April 8th, 2016, we bought 60 shares of Cerner at a price of $56.40. Cerner closed the month of April at $56.14, representing a -0.46% decrease in the stock price. With a price target of $72.41, 29.98% upside still remains. Again, with a price target of $72.41, buying in at the current price of $55.43 would generate 30.63% upside. I believe this is an ideal time to complete our full position Cerner.
The main reasons include the organic growth of the business, competitive advantage, and untapped markets. Organic growth represents that many of their key recent partnerships and acquisitions will materialize and see the market in future quarters. I believe these have not been priced into the stock and when these revenues are realized, it will result in the price of the stock increasing. Cerner announced on April 20th, an acquisition of Universal Health Systems. Universal Health systems provide great expertise from a billings perspective. Cerner has a lot of experience with the service and development portion of the business so this strategic acquisition supplements Cerner’s model perfectly. As the industry digitalization of the healthcare industry continues to evolve, consumers will need an integrated clinical and financial system together. This will ultimately lead to the development and implementation of bundle payments and at risk models.
There are opportunities in untapped markets in the industry that Cerner is putting itself in as strong position to take advantage of. The main untapped market is state and local governments. Management expressed confidence that the public is due to hear about key business in this market. Cerner takes pride in their data liquidity. Data liquidity is their ability to easily access and handle the diversity of the data. For example, technology systems within companies vary drastically.